Conversion
of property from one form to another in itself has no effect on eligibility but
property obtained through a conversion may have an effect on eligibility and
therefore shall be evaluated to determine its effect. (§50407)

481-1

If a
person or family meets the property limit at any time during the month,
property eligibility exists. (§50420(c))

481-2

The
property limit for one person is $2,000. The MFBU shall be ineligible if this
limit is not met sometime during the month. (§50420)

If a
person or family meets the property limit at any time during the month,
property eligibility exists. (§50420(c))

481-3

The
property limit for ___ person(s) is ___. The MFBU shall be ineligible if this
limit is not met sometime during the month. (§50420)

481-5

Once a
state has chosen to participate in the MN program, it must use a single
resource standard that meets the requirements of 42 Code of Federal Regulations
(CFR) §435.840(a).

In states
which do not use more restrictive criteria than SSI for aged, blind, or
disabled individuals, the resource standard must be established at an amount
that is no lower than the lowest resource standard used under the cash
assistance programs that relate to the state's covered MN eligibility group or
groups. (42 CFR §435.840(b))

481-6

Effective February 1, 1998, certain
individuals who would otherwise have had excess property for the entire month,
including the application month (but not the three retroactive months prior to
application), may receive Medi-Cal benefits when:

1. They are otherwise eligible for
Medi-Cal benefits.

2. They spend down
retroactively on qualified medical expenses in a later month within three years
from the notice denying Medi- Cal benefits based on excess resources, and
reduce property holdings to allowable limits.

3. Verification of payment is provided
to the county.

“Qualified medical expenses” are bills
incurred in any month by the individual or individual's spouse, any member of
the individual's MFBU, or the individual's children who are not in that
person's MFBU but who are living with the individual; and the bills are unpaid
in the same month where there is also otherwise excess property for the entire
month.

An
example of the application of the Principe v. Belshé court case
is set forth below.

A
hospitalized single person applies for Medi-Cal late in July 1998. The person
owns excess property, e.g., a $5,000 bank account. The person is not unconscious,
comatose, or incompetent at any time during the month, but simply is unable to
spend down to $2,000, the property limit for one person.

In
November, the person spends $4,000 on medical expenses which were incurred in
July. There is $3,000 in otherwise excess property, and no excess property as
of November. If other eligibility requirements are met, the person is
retroactively eligible for Medi-Cal benefits for July through October 1998, and
currently eligible in November. (The person cannot establish eligibility prior
to the application month.)

The
SSI/SSP program rules and methodology are used in several Medi-Cal programs
such as Pickle, Qualified Medi-Cal Beneficiaries (QMB) determinations, the
Tuberculosis Program, and the 250% program for the Working Disabled.
(All-County Welfare Directors Letter No. 99-67, December 3, 1999)

In the
SSI program, there are two resource limits: $2000 for an individual, and $3000
for an individual and spouse. (20 Code of Federal Regulations (CFR)
§416.1205(c))

482-1

The owner
of property for Medi-Cal purposes shall be the person who holds legal title to
the property unless otherwise specified in the regulations. Ownership of the
property may be vested in one individual or shared with other individuals.
(§50404)

482-1A

It is the
position of CDHS that if evidence clearly establishes that property held in the
individual's name, in whole or as a joint owner, does not belong to the
individual, then the property shall not be considered available to the
individual.

Such
evidence may include withdrawals and deposits made by someone other than the
individual; a postmarked envelope with a letter discussing the property and
providing instructions as to its use; or copies of the other person's pay stubs
with corresponding dates and deposits into the individual's account.

Statements
or affidavits alone are insufficient to establish unavailability.

If the
property is personal property, the individual must make a good-faith intent and
bona fide effort to remove his/her name from the property, or restrict his/her
access to the property.

State law
provides that the resources of a married individual who resides in skilled
nursing care shall be limited to all of his or her nonexempt separate property
and one-half of his or her nonexempt community property at the time when he or
she entered a skilled nursing facility. (Welfare and Institutions Code (W&IC)
§14006.2(c))

483-1

The
separate property and share of community property of any person included in the
MFBU shall be considered in determining Medi-Cal eligibility. A spouse's share
of community property is always one-half of the current total community
property. (§50403)

483-2

At the
time of the screening, application, or restoration, the county shall inform all
applicants of the appropriate property limits, and how property is exempted,
counted, and valued; review the MC 007 with all applicants; inform all
applicants of their right to reduce nonexempt excess property within the month
of application; and provide options as to how excess property may be reduced
and how adequate consideration may be obtained to establish eligibility in the
month. (ACWDL No. 91-78)

Effective
February 1, 1998, counties were required to destroy all old MC 007s, and to
issue new MC 007s. The forms will contain a note about the property disregard
program, the property limits and a list of the most common property exemptions,
including information on the Principe v. Belshé provisions.
(ACWDL No. 98-07, February 1, 1998)

On March
14, 2000, counties were reminded that they must provide the MC 007 to “all
Medi-Cal applicants whenever a Medi-Cal application is submitted or information
is requested about Medi-Cal. It must be reviewed with the individual during the
face-to-face interview or at screening/assessment.” (ACWDL No. 00-11, March 14,
2000)

483-2A

As of February 1,
1998, counties must inform applicants during the face-to-face (and/or at
screening, if the county has that process) of the Principe v. Belshé
provisions for establishing property eligibility for a month (beginning with
the month of application) whether or not there appears to be excess property.
The county worker shall provide the individual with the appropriate property
limit, and paraphrase or give the following information:

"If you have property which exceeds the
property limit for an entire month for which Medi-Cal is requested, you may
still be able to receive Medi-Cal benefits for that month or months if you are
otherwise eligible and you reduce your excess property by paying qualified
medical expenses. Qualified medical expenses are bills that are incurred in
any month by you, your spouse or any member of your Medi-Cal Family budget Unit
(MFBU), or your children who are living with you but who are not members of
your MFBU. These are bills which were unpaid in the same month where there was
also excess property for the entire month beginning with the month of
application. You may not establish eligibility for Medi-Cal in this way for
any of the three months immediately preceding the month of application."

(All-County Welfare
Directors Letter No. 97-41, October 24, 1997)

483-2B

Counties
must provide a form (currently DHS 7077, 12/99) containing specific language,
in 10-point type, to all long-term care (LTC) applicants, their spouses and/or
agents/authorized representatives. This form must be provided and reviewed
during an assessment or the face-to-face interview. The form must be signed by,
and a copy must be provided to the applicant and his or her spouse, legal
representative, or agent, if any, and a copy retained in the case record.

If the
applicant is not competent, the form must be reviewed with, signed by, and
provided to the competent spouse, if any, attorney and/or agent. If the legal
representative or agent is a public guardian or conservator and that person is
not attending a face-to-face interview, then the form must be mailed to the guardian
or conservator for their signature. The county must request that a signed copy
be returned to the county for retention in the case record.

In
reviewing the form with the individual(s) counties are requested to underscore
that there is NO PERIOD OF INELIGIBILITY FOR NURSING FACILITY LEVEL OF CARE FOR
TRANSFERS OF EXEMPT PROPERTY, INCLUDING THE PRINCIPAL RESIDENCE, AS LONG AS THE
PROPERTY WAS EXEMPT AT THE TIME OF THE TRANSFER. IF AN APPLICATION WAS NOT
FILED BY THE TIME OF THE TRANSFER, THEN THE COUNTY MUST DETERMINE IF THE
PROPERTY , INCLUDING THE PRINCIPAL RESIDENCE, WOULD HAVE BEEN CONSIDERED EXEMPT
AT THE TIME OF THE TRANSFER AS IF AN APPICATION HAD BEEN SUBMITTED FOR THE
MONTH OF THE TRANSFER.

Since
exempt property, nonexempt property included in the Community Spouse Resource
Allowance and nonexempt property under the property limit can all be retained
without affecting Medi-Cal eligibility, it is only when excess property is
transferred that Medi-Cal eligibility is affected. Before a period of ineligibility
for nursing facility level of care may occur, the county must make a
determination that the nonexempt property transferred would have been
considered excess nonexempt property at the time of the transfer. If no
application was filed by the time of the transfer, then the county must
determine whether the nonexempt property transferred would have been considered
excess nonexempt property as if an application had been submitted for the month
of the transfer.

County Department Responsibilities for
Informing All Medi-Cal Applicants or Potential Applicants at Screening.

(a)At screening or at
application and restoration, the county department shall:

(1)Inform all
applicants of the appropriate property limits and how property is exempted.
Counted, and valued. As appropriate, inform applicants how property is divided
as community property under Section 50403 or divided between institutionalized
and community spouses.

(2)Review the
"Community Property -- Person in Long-Term Care (LTC) " (MC
Information Notice 005) with all applicants with LTC status who have entered an
LTC facility prior to 9/30/89 and review with all applicants. The Medi- Cal General
Property Limitations for All Medi-Cal Applicants" (MC Information Notice
007) including clarification of the provisions listed in subsection (8) below.

(3)If applicable,
inform all applicants of their right to reduce nonexempt excess property within
the month of application, provided the applicant receives adequate
consideration. After January 1. 1990, the requirement to receive adequate
consideration applies only to an institutionalized individual as defined in
Section 50046.4.

(4) If applicable,
provide options as to how excess property may be reduced and how adequate
consideration may be obtained, in order to establish eligibility in the month.
This shall be done as soon as there is an indication that the applicant may own
property which could result in ineligibility whether or not there is actual
verification. Such options shall include but are not limited to: (A) Paying
off medical or other bills (B) Purchasing exempt items (C) Paying off
mortgages or car loans: making home repairs or improvements to property. If
the applicant has LTC status, is not an institutionalized spouse, and is
reducing excess nonexempt property in this manner, the payments must be made in
no more than the same proportion to which the applicant holds ownership interest
in these items. (D) Encumbering (in accordance with Section 50039) or
borrowing against the cash values of nonexempt property and life insurance
policies and then reducing the proceeds while receiving adequate consideration,
by the end of the month for which Medi-Cal is being requested. (E) The county
shall inform the applicant that the cash surrender value of nonexempt life
insurance policies and any other asset will be considered unavailable as long
as the applicant continues to make a. good faith effort to liquidate the asset
as limited by Section 50402

A
Medicaid Qualifying Trust (MQT) or Similar Legal Device (SLD) is an instrument
established prior to August 11,1993 which: (1) is established, other than by
will, by an individual, or the individual's spouse, guardian, conservator or
legal representative who is operating on the person's behalf; (2) provides that
the individual may receive all or a part of the payment from the trust, either
directly or to another person or entity on behalf of the individual; (3) gives
the trustee any discretion in distributing funds to the individual or another
person on behalf of the individual.

Property
in an MQT or SLD is generally considered available if the instrument is
revocable. If the MQT or SLD is irrevocable, (1) any amount distributed to, or
on behalf of, the individual from principal is available property; (2) any
amount distributed to, or on behalf of, the individual from income is income;
and (3) the maximum amount the trustee could legally distribute under the terms
of the instrument, even if not distributed, is available property.

Section 50489 (pertaining to Medicaid
Qualifying Trusts (MQTs) and Similar Legal Devices (SLDs) had not been amended
from May 6, 1994 through January 27, 1998, but 42 United States Code (USC)
§1396p(d) was amended effective August 11, 1993 and provided for a different
treatment of MQTs and SLDs than had previously existed. The CDHS issued
instructions to the counties as to the treatment of trusts established on or
after August 11, 1993 which instructions are contained in All-County Welfare
Directors Letter (ACWDL) No. 94-01, January 5, 1994.

The following summarizes the provisions of 42
USC §1396p(d) and is generally reflective of the CDHS position as contained in
ACWDL 94-01 and of §50489.5, effective January 28, 1998.

Trusts affected by this section are those
established on or after August 11, 1993. The assets in the trust must include
at least some assets of the individual as part of the trust corpus. The trust
must not have been established by will. It must have been established by the
individual or his/her spouse; or a person, including a court or administrative
body with legal authority to act in place or on behalf of the individual or
his/her spouse; or which person is acting at the direction or upon the request
of the individual or the individual's spouse. (42 USC §1396p(d)(2)(A))

When the corpus consists of assets of other
persons, those assets shall not be governed by these provisions. (Subsection
(2)(B))

In the case of a revocable trust, the corpus
is considered an available resource. Payments from the trust to or for the
benefit of the individual are income. Any other payments are considered
transfers of assets and treated in accord with 42 USC §1396p(c). (Subsection
(3)(A))

In the case of irrevocable trusts in which
payment from the trust could be made to or for the benefit of the individual,
then the entire amount the trustee could legally distribute is available
property. Distributions from income to or on behalf of the individual are
income; distributions of property are property. (Subsection (3)(B)(i))

Any portion of the irrevocable trust from
which no income nor property payments could be made is treated as a transfer
under 42 USC §1396p(c). (Subsection (3)(B)(ii))

The following trusts are not governed by the
above.

1. A trust containing
the assets of an individual under age 65 who is "disabled" (under
Title II or XVI) and which is established for the individual's benefit by a
parent, grandparent, or legal guardian of the individual, or by a court: IF
the State will receive all amounts remaining in the trust upon the individual's
death, up to an amount equal to the State's payment for medical assistance on
behalf of the individual. (Subsection (4)(A))

2. A trust containing
the assets of a "disabled" (under Title II or XVI) individual;
established by the individual's parent, grandparent, legal guardian, or by a
court; managed by a nonprofit association which pools the accounts for
investment and management purposes but maintains separate accounts for each
beneficiary: IF the State will receive all amounts remaining in the trust upon
the individual's death, up to an amount equal to the State's payment for
medical assistance on behalf of the individual. (Subsection (4)(C))

State
regulations provide that property which is not available shall not be
considered in determining eligibility. (§50402)

Although
§50402 has not been formally amended as of December 1, 2002, the following
rules have been in effect since January 1, 1990 based on federal law.

Property
which the applicant or beneficiary has the legal right, power, and authority to
liquidate is considered available and is used in determining eligibility.

If there
is excess property and the applicant or beneficiary establishes a good-faith
intent and makes a bona fide effort to liquidate the property or otherwise
fulfill the requirements of this proposed section, the property shall be
considered unavailable beginning the first day of that month. The property
shall remain unavailable until after consideration for the property is
received, or until the applicant or beneficiary discontinues his/her good faith
intent or bona fide efforts to liquidate the property. This availability
principle applies to other real property regardless of value.

A bona
fide effort to sell includes listing the property for sale with a licensed real
estate broker for its fair market value, advertising the property for sale in a
local newspaper, accepting bona fide offers within two-thirds of the fair
market value, and supplying copies of all offers.

If evidence clearly establishes that property
held in the name of an applicant or beneficiary or shared with another person
does not belong to the applicant or beneficiary but belongs to a person who is
not an MFBU member, then such property shall not be considered available to the
applicant or beneficiary.

(1) Such evidence may
include but is not limited to:

A. Corresponding
withdrawals and deposits from the non-MFBU member's accounts to the account
belonging to the applicant or beneficiary.

B. A postmarked
envelope with the letter from the non-MFBU member discussing the property in
question and providing instructions as to its use which corresponds with dates
and amounts of deposits into the applicant's or beneficiary's account.

C. Copies of paystubs
belonging to the non-MFBU member and corresponding dates and deposits into the
account (of) the applicant or beneficiary.

(2) Such evidence shall
not consist only of statements or affidavits but must be supported by other
evidence as described in subsection (1).

The CDHS
policy is to consider an individual's property unavailable whenever that
individual is unconscious, comatose, or incompetent at any time during the
month, since that individual would not have the legal capacity to liquidate the
property. Counties must consider whether property is available before including
property in the property reserve. (All-County Welfare Directors Letter (ACWDL)
No. 97-41, October 24, 1997, referencing ACWDL No. 90-01, and §50402)

483-5A
ADDED 12/04

Even if
the applicant is regarded as incompetent (this includes individuals in a
comatose or unconscious state) and unable to handle his/her own affairs, if
another individual (family member, friend, etc.) can get access to the property
then it must be regarded as available. Many elderly persons have friends or
relatives listed on bank accounts and this joint access situation should be
determined. If the incompetent individual is the only person who has access,
the account will be regarded as unavailable. (ACWDL 94-62, August 2, 1994)

483-6

Loans
which require repayment, other than certain educational loans and grants as
specified in §50533, shall be included in the property reserve beginning in the
month of receipt. Loans that do not require repayment are treated as income in
the month of receipt and treated as property thereafter. (§50483)

483-7

Property and income held in trust for the
benefit of a person, or the person's spouse, shall be treated in accord with
§§50489 through 50489.9. (§50489(a)) For purposes of these §§50489 through
50489.9, the following definitions apply. (§50489(b))

“(1) 'Annuitant' means a
person who has the right to receive payments from an annuity. The annuity
shall be annuitized based upon the life expectancy of the annuitant.

“(2) 'Annuitized' means
that an annuity is paying a fixed, equal amount to the annuitant on a periodic
basis. Payments shall be no less frequent than monthly over a number of years
equal to or less than the annuitant's life expectancy as indicated in life
expectancy tables provided by the Secretary for the Department of Health and
Human Services, contained in §3258.9 (Revision 64), Part 3 of the Health Care
Financing Administration's State Medicaid Manual and titled 'Life Expectancy
Table--Males and Life Expectancy Table--Females'. The final annuity payment
may be for an amount less than the previously fixed annuity payments in order
to fully exhaust benefits under the annuity. An annuity shall be considered
annuitized even though it may provide an annual cost of living adjustment equal
to or less than 5%.

“(3) 'Annuity' means a
contract to make periodic payments of a fixed or variable sum paid to an
annuitant which are payable unconditionally. Annuity payments may continue for
a fixed period of time or for as long as an annuitant lives. An annuitant
purchases an annuity with his or her property or property rights. Annuities
shall be established to provide the annuitant with payments representing
principal and interest which are more than the fair market value of the
property used to purchase the annuity. Annuities purchased prior to August 11,
1993, other periodic payment plans, or annuities that are purchased with
property rights belonging to someone other than the Medi-Cal
applicant/beneficiary or spouse shall continue to be treated in accordance with
Title 22, §50402 and Article 10 of this chapter.

“(4) 'Assets' shall mean
all income and property of the individual or the individual's spouse, including
income or property which the individual or spouse is entitled to, but does not
receive because of circumstances brought about by:

“(A) the individual or the individual's
spouse, or

“(B) any other individual
or entity, including a court or administrative body, with legal authority to
act in place of, or on behalf of, the individual or the individual's spouse, or

“(C) any other individual
or entity, including any court or administrative body, acting at the direction
or upon the request of the individual or the individual's spouse.

“(5) 'Beneficiary' means
any individual or individuals designated in the trust instrument as benefiting
in some way from the trust.

“(6) 'Date of
establishment' means the date the trust document (in the case of a trust),
annuity purchase agreement (in the case of an annuity), or other creating
document (in the case of a similar legal device) is signed and dated. A trust
is not considered to be established on the date it has been amended.

“(7) 'Irrevocable trust'
means a trust which cannot be revoked by its own terms or a trust deemed to be
irrevocable under State law.

“(8) 'Revocable trust'
means a trust which can be revoked by its own terms or a trust deemed to be
revocable under State law.

“(9) 'Similar legal
device' (SLD) means any legal instrument, device or arrangement that involves
the transfer of assets from an individual or entity (transferor) to another
individual or entity (transferee) with the intent that the assets be held,
managed, or administered by an individual or entity for the benefits of the
transferor or certain other individuals. SLDs also include annuities purchased
on or after August 11, 1993.

“(10) 'Trust' means any
arrangement in which an individual or entity (trustor) transfers assets to a
trustee with the intent that the assets be held, managed, or administered by
the trustee(s) for the benefit of the trustor, or certain designated
individuals (beneficiaries). The trust must be valid under state law. The
term 'trust' also includes any legal instrument or device similar to a trust as
described in subsection (b)(9) of this section.

“(11) 'Trustee' means any
individual(s), entity, trust advisory committee, or individual(s) with power of
appointment, who manages, holds, or administers a trust for the trust
beneficiary or beneficiaries.

“(12) 'Trustor' means an
individual who creates a trust. A trustor is also known as the 'settlor' or
'grantor'.”

(§§50489(b)(1)-(b)(12))

483-8

For purposes of §§50489 through 50489.9,
trusts are classified as:

(1) Medicaid Qualifying
Trusts (MQTs), established prior to August 11, 1993 and described in §50489.1.

(2) OBRA 93 Trusts,
established on or after August 11, 1993 and described in §50489.5.

(3) Other Trusts, i.e., trusts
different from MQTs or OBRA 93 Trusts.

(§50489(c))

483-9

A written
trust shall be verified by examining the trust and other related documents.
(§50489(e)(1)) An oral trust cannot exist for real property. An oral trust
shall be verified by affidavits dated and signed under penalty of perjury,
specifying the terms of the oral agreement, or by any other related document.
(§50489(e)(2))

483-10

When an OBRA 93 trust will result in
ineligibility, eligibility shall not be denied if undue hardship is found to
exist. The county shall notify the individual that undue hardship is being
considered prior to denying eligibility based on an OBRA 93 Trust or annuity.
If undue hardship is considered and found not to apply, the county shall state
that on the Notice of Action.

“Undue hardship” exists when all of the
conditions in §§50489.5(h)(1) through (h)(4) exist, or when the conditions in
either Subsection (h)(5) or (h)(6) exist. Those subsections are set forth
below:

“(1) The trust assets
cannot, under any circumstances, be used to provide for the health care or
medical needs of the Medi-Cal applicant or Medi-Cal beneficiary, and

“(2) Health care cannot be
obtained from, and medical needs cannot be met by, any source other than
Medi-Cal without depriving the individual of food, clothing or shelter or other
necessities of life, and

“(3) The individual's
parents (if the individual is under 21) or the individual's spouse, cannot
provide for the health care and medical needs or health care coverage of the
individual without depriving themselves of food, clothing or shelter or other
necessities of life, and

“(4) The courts have
denied a good faith petition to release the trust assets to pay for the
required medical care.

“(A) A petition to
release the trust assets shall not be considered a valid good faith petition if
the petition contains language which suggests or requests that the courts do
anything other than release the trust assets needed to pay for the required
medical care.

“(B) The counties shall
verify that the criteria contained in subsections (h)(4) and (h)(4)(A) of this
section, concerning a valid good faith petition and court order exist by
examining the petition and the court order.

“(C) Subsection (h)(4) of this section
does not apply to an annuity.

“(5) No person shall be
made ineligible to the extent that trust contains otherwise exempt income or
property.

“(6) No person shall be
made ineligible due to the application of subsection (g) of this section,
concerning an annuity purchased prior to March 1, 1996 when the annuity cannot
be annuitized to comply with the provisions of subsection (g) of this section.
Any annuity purchased prior to March 1, 1996 which cannot be annuitized to
comply with the provisions of subsection (g) of this section, shall continue to
be considered in accordance with §50402."

(§50489.5(h))

483-11

Annuities purchased on or after August 11,
1993 which are not subject to treatment under undue hardship provisions shall
be treated as follows:

o Payments from the
annuity shall be considered income in accordance with Article 10.

o If payments are
deferred at any time, the cash surrender value of the annuity shall be
considered available property.

A. PERIOD CERTAIN ANNUITIES

o Once the individual
or spouse receives or takes steps to receive periodic payments of principal and
interest, the balance of the annuity shall be considered unavailable.

o Payments must be
scheduled to exhaust any balance remaining in the annuity, at or before the end
of the annuitant's life expectancy, based upon the life expectancy tables
compiled by the Actuary of the Social Security Administration and set forth in
§9J of the Medi-Cal Eligibility Procedures Manual (MEPM). Use the tables with
the age of the annuitant as of the date the annuity was purchased or the date
the payment plan was established, whichever is the most recent.

o If the years of
expected life for the annuitant, based on the life expectancy tables compiled
by the Actuary of the Social Security Administration, is less than the years of
scheduled payments under the terms of the annuity, and if the annuity cannot be
restructured, then the payments in excess of the annuitant's life expectancy
shall be considered a transfer of property for less than fair market value that
may be a disqualifying transfer.

o Any predetermined
specified amount or number of payments set aside for any other individual
(other than for the sole benefit of the spouse) shall be considered a transfer
of property that may be a disqualifying transfer.

o After payments to the
annuitant begin, if payments are later designed to be made to any other individual
(other than for the sole benefit of the individual or spouse), the payments
shall be considered a transfer of income that may be a disqualifying transfer
in the future.

Note: Whenever an annuity has not been
properly annuitized, counties shall advise the individual that he/she must
attempt to have the annuity annuitized in accordance with these procedures.
When it is necessary to advise an applicant/beneficiary that he/she must
annuitize the annuity in accordance with these procedures, provide the applicant/beneficiary
with the annuitant's life expectancy by entering the Secretary's tables using
the annuitant's current age. The balance of the annuity shall be considered
unavailable once steps have been taken to annuitize the annuity in accordance with
these procedures until the payment(s) are received. Counties shall also
consider whether the undue hardship provisions apply before taking adverse
actions. (See MEPM §9 J V - I) When undue hardship is considered and found
not to apply, the notice of action shall state that "the undue hardship
provisions were considered and found not to apply."

(MEPM §9J-13, 14)

483-12
ADDED 9/08

a) For purposes of this section
pension funds are funds held in Individual Retirement Accounts (IRAs) or in work
related pension funds for income when employment ends which are administered by
an employer orunion including such plans as Deferred Compensation Plans
and Thrift Plans and including such plans for self-employed individuals as
KEOGH plans.

(b) Notwithstanding any
interspousal agreement. pension funds shall be exempt from consideration as a resource
if the funds are held in the name of the applicant's or beneficiary's spouse
community spouse, parent or parent's spouse if that person is either ineligible
or does not choose to receive Medi-Cal.

(c) Pension funds shall continue
to be nonexempt for purposes of determining if an interspousal agreement under
Section 50403 was equally divided.

(d) If payment of nonexempt
pension funds are deferred anytime while the owner is a Medi-Calapplicant
orbeneficiary, the cash surrender value of thepension fund will
be deemed available to the owner and counted in his/her property reserve.

(e) If the applicant or
beneficiary has the option of selecting a cash lump sum payment or periodic
payments of accumulated principal and interest from a nonexempt pension fund,
the applicant or beneficiary may choose either option. The pension fund shall
be considered unavailable in accordance with Section 50402 once the applicant
provides evidence that he/she has notified the pension fund to begin
payment(s).

(f) If, or once periodic payments of the principal and accumulated
interest of the nonexempt pension funds have started, the periodic payments
shall be considered income and the remaining principal and interest shall be
considered unavailable property. A cash lump sum payment of principal andinterest
shall be considered property in accordance with Section 50455.

·The applicant is
receiving periodic payments from each fund or systematic withdrawals from each
fund or minimum mandatory distributions at age 70 and ½ or older from his/her
total fund or,

·The applicant has
requested release of the funds in the form of a lump sum or payments in which
case the balance of the funds are unavailable from the first of the month that
a request for the release of the funds is made, until the funds are received
or,

·The individual
must terminate employment to access the funds or,

·The funds are held
jointly with a third party and that party refuses to grant access to the funds.

(ACWDL
02-51, October 18, 2002; answer to question 4)

483-13
ADDED

1/15The
California Uniform Gift to Minors Act provides that a person may make an
irrevocable gift to a child that is managed by a custodian for the benefit of
the child. The duties imposed on the custodian are similar to a trustee to
manage and prudently invest custodial property solely in the interest of a
trust beneficiary. A custodian, unless a trustor however, does not thold legal
title to the property and has no ownership interest. The transferor, who is
also the custodian of such property, may choose to restrict his/her custodial
powers. In that case, none of the funds could be spent before the time of
distribution except by court order “upon a showing that the expenditure is
necessary for the support, maintenance or education of the minor.” If there is
no indication that the transferor/custodian has restricted the custodial
powers, the custodian is free to use the funds for the child’s benefit without
a court order. When a child has an account of this type and is to be included
in the MFBU, the value of the account is considered available when no
restrictions have been placed on the property. When the custodian’s powers
have been restricted, preventing access to the funds except by court order, the
funds shall be considered unavailable. If funds are distributed from trust
income, they shall be considered income in accordance with Article 10.
(Medi-Cal Eligibility Procedures Manual (MEPM), Article 9J)

484-1

Mortgages,
deeds of trust and other promissory notes are to be included in the property
reserve. Their value is to be determined by the principal amount remaining on
the note or by a qualified appraisal. Parties qualified to appraise such items
include but are not limited to: banks, savings and loan associations, credit
unions, or licensed loan or mortgage brokers. (§50441)

A
mortgage or note secured by a deed of trust which has been obtained through the
sale of real property, shall be classified as real property. (§50441(b))

484-2

The net
market value of property is the owner's equity in the property and it is determined
by subtracting the encumbrances of record from the market value. (§50415)

484-3

Stocks,
bonds, and mutual funds shall be included in the property reserve. The value of
these items shall be the closing price on the date the property is evaluated.
(§50456)

484-4

A life
estate interest in real or personal property shall be considered real or
personal property, respectively. The value of the life estate shall be the
entire market value of the property if the applicant or beneficiary was the
owner of the property prior to selling the property, and retains a revocable
life estate in the property. In all other instances, the value is determined in
accordance with the California State Gift Inheritance Tax Formula, or at the
applicant's or beneficiary's option, a lesser value as determined by a
qualified appraiser (as described in §50441(c)). (§50442)

484-5

State
law, which applies to the medically needy and to state-only Medi-Cal persons,
provides that if property holdings consist of money on deposit, the value is
the actual amount. If the holdings are in any other form of personal property
or investment, except life insurance, the value shall be the conversion value
as of the date of application or the anniversary date of such application. If
the holdings are in the form of life insurance, the value shall be the cash
surrender value as of the policy anniversary nearest the date of such
application. (Welfare and Institutions Code §14006(g))

484-6

State law
provides that the value of property holdings shall be determined as of the date
of application and if the person if found eligible, this determination shall
establish the amount of such holdings to be considered during the succeeding 12
months. A new determination shall be made on the first anniversary date of the
application, or such alternate date as may be established following the
acquisition of additional holdings, as provided in Subsection (i). (Welfare and
Institutions Code (W&IC) §14006(h))

If any
person shall acquire additional holdings by gift, inheritance, or other manner
(other than from his or her own earnings), that person shall immediately report
such acquisition, and the anniversary date shall become the date of such
acquisition. (W&IC §14006(i))

485-1

As of October 15, 1996, the CCR provides that
one motor vehicle that is used for transportation is exempt. If there are two
or more vehicles, the applicant or beneficiary shall be allowed to choose the
exempt vehicle. (§50461(a)) Nonexempt vehicles shall be included in the property
reserve. (Subsection (b)) The nonexempt vehicle's net market value is
determined by multiplying the vehicle license fee (not including registration
or weight fees) by 50, and then subtracting any encumbrances of record.
(Subsection (c)) The applicant or beneficiary may obtain three estimates if
he/she disagrees with the value established by the county. (Subsection (e))

While these regulations remain in effect as of
December 1, 2002, they have been inconsistent with the Social Security Act (42
United States Code §1396(r)(2)) since April 6, 1992, because they are more
restrictive than the rules which govern AFDC. To remedy this, the CDHS issued
proposed §50461 which provides that:

(a) One motor vehicle shall be exempt.

(b) The applicant or
beneficiary shall be allowed to choose which vehicle shall be considered exempt
except that recreational and business vehicles shall be exempt under this
section only if other motor vehicles are not available to provide
transportation to the applicant or beneficiary.

(c) The net market value
of a motor vehicle may be determined by multiplying the vehicle license fee by
50, and subtracting encumbrances of record.

(d) When the class of
the motor vehicle is unknown, the State Department of Motor Vehicles may be contacted
to determine the license fee, or the county may use Subsection (e) to determine
market value.

(e) When there is disagreement as to
the net market value, the county may use:

(1) The wholesale “Kelley Blue Book”
value.

(2) The National Auto Dealers
Association Guide value.

(3) An estimate
obtained by the applicant from a disinterested, knowledgeable source.

(g) The net market value
of all nonexempt motor vehicles shall be included in the property reserve.

(All-County Welfare
Directors Letter No. 96-55, September 20, 1996)

486-1

Income
received during a month and deposited in a checking or savings account shall
not be considered as property during that month. (§50453(a)(1))

Although
§50453(a)(1) has not been formally amended as of December 1, 2002, §50453(a)(1)
was modified by CDHS effective May 1, 1990 (based on its interpretation of
State and federal law) to apply only to nonbusiness accounts which are available
in accordance with proposed §50402. (All-County Welfare Directors Letter No.
91-28, March 22, 1991)

486-2

There is
an exclusion of business property from property consideration in certain
circumstances. Equipment, inventory, licenses and materials shall be considered
necessary for self-support if the business is realizing a reasonable rate of
return. Motor vehicles shall be considered equipment only if used for
employment. Cash on hand and money in checking accounts necessary for the
functioning of the business shall be exempt up to a maximum of three times the
average monthly cash expenditures of the business. (§50485)

Although
§50485 has not been formally amended as of December 1, 2002, the following
rules have been in existence since May 1, 1990 based on federal law. First, it
is no longer necessary to realize a reasonable rate of return in order to
exempt the equipment, inventory, licenses and materials. Second, cash on hand
and money in checking accounts necessary for the functioning of the business
are totally exempt. Third, real property used in whole or in part as a business
or means of self-support is exempt. (All-County Welfare Directors Letter No.
91-28, March 22, 1991)

486-2A

The CDHS exempts equipment, inventory,
licenses, materials, and real estate which are in current use and are necessary
for employment, for self-support or for an approved plan of rehabilitation or
self-care necessary for employment. (All-County Welfare Directors Letter
(ACWDL) No. 91-28, March 22, 1991, proposing to amend §50485)

The CDHS clarified ACWDL 91-28 as follows:

1. Property used simply
for investment purposes, rather than for self-employment is not exempt. This
includes a former home which is now rented. (Such former home may be exempt as
a principal residence if it meets the requirements of §50485(c))

2. As long as
individuals have an approved plan for achieving self-support, from the county,
the Department of Rehabilitation, or the SSI program, property included in that
plan, even if not currently in use, may be exempted. (ACWDL No. 95-22, April
3, 1995)

486-2B

The CDHS
considers equipment, inventory, licenses, and materials "necessary for
employment" (and therefore exempt property) if the applicant or
beneficiary uses them for employment; or if they have been used for employment
in the past year and the currently unemployed applicant or beneficiary is
actively seeking employment in which the same property can be used; or if the
owner verifies the existence of a business by providing current or prior year
tax returns for the business such as Internal Revenue Service (IRS) Schedules
C, SE, F, or Forms 4562 or 1065 (or other business records if these IRS forms
are unavailable). (All-County Welfare Directors Letter No. 91-28, March 22,
1991, proposing §50485(a)(1))

Motor
vehicles are considered "equipment" when used for employment or
self-support, but not when used for commuting purposes. (Proposed §50485(b))

Cash on
hand and money in checking accounts necessary for the business or as a means
for self-support are exempt (Proposed §50485(c) as is real property used in
whole or in part as a business or means of self-support (Proposed §50485(d)),
but stocks, bonds, and other similar items of personal property are not exempt.
(Proposed §50485(e))

486-3
REVISED 3/08

The net
cash surrender value of life insurance policies, except term insurance, is
included in the property reserve except when the combined face value of all
policies on each individual is $1,500 or less. (§50475)

At the time §50475 was
certified, term insurance policies did not have cash values. Some term
insurance policies now do have cash values. The face value of term insurance
policies that generate cash surrender value must be combined with the face
values of other insurance policies to determine if the combined face values are
$1,500 or less. If the combined face values of all the policies exceed $1,500,
the net cash surrender value of all the life insurance policies of that
individual shall be included in the property reserve.

When a term life insurance policy has
no cash surrender value, the face value is not taken into account with respect
to the $1,500 limitation. (ACWDL 08-02, January 24, 2008)

486-3A
ADDED 3/08

“Life insurance means a
contract for which premiums are paid during the lifetime of the insured, and on
which the insuring company pays the face amount of the policy to the
beneficiary upon the death ofthe insured. Life insurance
may also be purchased by a single premium or by letting dividends accumulate.
(§50054.5)

Endowment Life Insurance Contracts
(ELICs) do not fit this regulatory definition and thus are not considered to be
“life insurance” for Medi-Cal eligibility purposes. The contracts are for a
term of years and provide that after the expiration of the designated term,
“the insured” will be returned his/her initial payment along with some
additional money. (ACWDL 08-02, January 24, 2008)

486-3B
ADDED 3/08

Endowment Life Insurance
Contracts are considered to be a legal instrument or device similar to a trust
under California Code of Regulations (CCR), Title 22, § Section 50489(b) and
are thus treated like a trust for Medi-Cal eligibility purposes. (ACWDL 08-02,
January 24, 2008)

486-3C
ADDED 3/08

Assets held in
Endowment Life Insurance Contracts are considered available property and
included in the property reserve pursuant to CCR, Title 22, Section 50489.5 (f)(1) which states:“if
payments can be made from the trust to, or for the benefit of,the
individual or spouse at any time or under any circumstances,the
portion of the trust income or principal from which payment(s) to the
individual or spouse could be made shall be considered property available to
the individual or spouse.” (ACWDL 08-02, January 24, 2008)

486-4

Mobile
homes which are not assessed as real property by the county assessor shall be
included in the property reserve unless exempt as a principal residence, or as
a vehicle used for transportation. (§50463(a))

486-5

The
entire amount in checking and savings accounts to which the applicant has
unrestricted access shall be included in the property reserve. If the applicant
or beneficiary presents clear evidence that all or a portion of these funds are
the property of a nonfamily member, that portion of the account shall not be
included in the property reserve. Income
received during a month and deposited in a checking or savings account shall
not be considered as property during that month (§50453)

486-5A

Although
§50453 has not been formally amended as of December 1, 2002, the following modifications
to that section have been in effect since May 1, 1990 based on CDHS
interpretation of State and federal law.

First,
§50453 applies only to nonbusiness accounts.

Second,
availability to the MFBU of those accounts is determined in accordance with
proposed §50402 (as set forth in All-County Welfare Directors Letter (ACWDL)
No. 90-01, January 5, 1990).

Third,
proposed Subsection (a)(2) provides that accounts held with persons whose
property is not otherwise included in the property reserve of the MFBU shall be
considered available in their entirety if the MFBU member, or responsible
relative or persons for whom that relative is responsible has access to the
funds, unless all or a portion of the funds is unavailable in accordance with
proposed §50402. (ACWDL No. 91-28, March 22, 1991)

486-6

Retroactive
SSI and Title II benefit payments shall not be included in the property reserve
for a period of six months after the month in which they are received.
(§50455(b))

486-7

All
recreational items shall be exempt with the exception of recreational motor
vehicles, boats, campers and trailers. (§50469)

486-8

Property
purchased under a signed contract of sale by the applicant or beneficiary shall
be included in the property reserve. Property being sold by the applicant or
beneficiary under a signed contract of sale shall not be considered the
property of the applicant or beneficiary. The interest payments received under
the contract of sale shall be treated as unearned income, while the principal
payments shall be treated as property. When property is being purchased or sold
under a verbal or unsigned contract of sale the property shall be considered
the property of the seller until the sale is complete. (§50405)

486-9A

The first
$1,500 paid for revocable designated burial funds, which funds include burial
trusts and contracts, securities, annuities or any separately identifiable
asset designated as set aside for the individual's burial, cremation or
interment, are exempt. (§50479(b))

Designated
burial funds may include cash on hand, but the fund must be separately
identifiable and clearly designated for burial expenses. Commingling of burial
funds with other funds will cause loss of the $1,500 exemption.

Previously
exempt burial funds that do not meet these criteria must be converted to meet
these new criteria. Counties must notify individuals at application or
redetermination of burial funds that result in excess property, and the
individual must be given until the end of the month following this notification
to complete the conversion.

Burial
funds may not be "undesignated". Once a fund is exempted, if all or a
portion of the funds are used for another purpose, those funds would be added
to the property reserve, and could result in an overpayment.

1. Money or securities
placed in an irrevocable trust for funeral, cremation, or interment expenses
with trustees such as banking institutions or trust companies, or certain
cemetery authorities.

2. Money or securities
placed in an irrevocable trust created by the deposit in an insured savings
institution, made by a person with his/her money, in his/her name as trustee,
for a funeral director to provide payment for funeral services on the
depositor's death.

3. Life or burial
insurance purchased specifically for funeral, cremation, or interment expense,
which is placed in an irrevocable trust, or which has no loan or surrender
value available to the recipient.

4. Securities issued by
a licensed cemetery authority which by their terms are convertible only into
payment for funeral, cremation or interment expenses.

(§50479(a))

486-10

Federal
regulations provide that to determine eligibility on the basis of resources for
Medically Needy (MN) individuals, the state agency must deduct the value of
resources that would be deducted in determining eligibility under Supplemental
Security Income (SSI). (42 Code of Federal Regulations (CFR) §435.845(d))

In
determining the resources of an individual (and spouse, if any) $1,500 of funds
set aside for the burial of each individual and his/her spouse, shall be
excluded. (20 CFR §416.1231(b))

486-11

All
student assistance payments provided to students under authority of Title IV of
the Higher Education Act of 1965 and Bureau of Indian Affairs education
assistance, are exempt for purposes of determining Medi-Cal income eligibility
and property eligibility (notwithstanding §50483).

According to
the Medi-Cal Eligibility Manual, Section 9D, loans requiring repayment and
which are not exempt under (Title 22, CCR §50533) are considered property in
the month of receipt rather than income (Title 22, CCR §50483). However, some
reverse mortgages may be an exception to this rule.

Specifically, a
reverse annuity mortgage plan may provide that part of the equity of the home
be used to purchase an annuity payable to the homeowner. These payments would
be considered unearned income pursuant to (Title 22 CCR §50507). Conversely,
payments from home equity conversion plans funded by the financial institution,
without utilizing an annuity, would be considered property in the month of
receipt.

With respect to a line of credit, Department of Health Care
Services does not consider a line of credit to be an available resource since
it is not a loan requiring repayment until the funds are drawn down. Once
funds are drawn down it becomes an obligation or a loan requiring repayment
(Title 22, CCR §50533) and would be a countable resource in the month of
receipt.(ACWDL 08-17, April 25, 2008)

487-1

Sections
50408 and 50409 discuss transfers of property which result in ineligibility to
Medi-Cal. There is a presumption that property transferred by the applicant or
beneficiary more than two years preceding the date of initial application was
not transferred to establish eligibility or to reduce the share of cost. Such
property shall not be considered in determining eligibility, unless there is
evidence which disproves the presumption.

As of
January 1, 1990, there was neither state nor federal authority to impose a
disqualification period for the transfer of assets, except in certain cases
involving institutionalized individuals, who, or whose spouse at any time
during or after the 30-month period immediately before the date the individual
became an institutionalized individual, disposed of resources for less than
fair market value. See 42 United States Code §1396p(c) and Welfare and
Institutions Code §14002 and 14006. However, as of October 1, 2002, the
regulations cited above had not been amended nor repealed.

Although
CDHS has not formally amended the regulations, it is the departmental policy,
based on federal law, not to apply the regulations to transfers of property
unless the transfer occurred before January 1, 1990, and was made by an
institutionalized individual or by a person who was a beneficiary prior to
January 1, 1990. (All-County Welfare Directors Letter No. 90-01, January 5,
1990)

487-1A
REVISION 7/10

The CDHS
has established the following policy for transfers of nonexempt property which
occurred on or after January 1, 1990.

An
institutionalized individual who transfers nonexempt property at any time,
including within 30 months immediately preceding the date of application for
Medi-Cal, shall be presumed to have transferred that property in order to
establish eligibility or reduce the share of cost (SOC).

Unless
that presumption is rebutted, there shall be a period (not to exceed 30 months)
in which the person is ineligible for nursing facility services or their
equivalent. (All-County Welfare Directors Letter No. 90-01, January 5, 1990,
proposing §§50408.5 and 50411.3; 42 United States Code §§1396p and 1396r-5)

Effective
January 1, 1997, counties are instructed to gather all the necessary
information as usual, determine whether or not the transfer was made on or
after January 1, 1997 and whether or not it is potentially disqualifying in
accordance with ACWDL No. 90-01, Section 50408 – 50411.5. If the transfer still
appears to be a disqualifying transfer, counties shall complete the Medi-Cal
176 PI. If in completing the Medi-Cal 176 PI, any months remain for which a
period of ineligibility would be imposed resulting in restricted services
eligibility for the institutionalized individual, then the counties shall copy
and send or fax all pertinent case record documentation to the Department of
Health Care Services/MCED at 1501 Capitol Ave..Suite 71-4063, MS 4607, P.O. Box
997417 Sacramento, California 95899-7417; Attn: Property Analyst.

The
county shall pend the case and shall NOT send a Notice of Action for restricted
services eligibility to the institutionalized individual until the property
analyst has completed the review of the case record documentation and determination. (All
County Welfare Director’s Letter 97-05, February 26, 1997)

487-2

Section
50408(a)(1) provides that exempt property which is transferred shall not result
in ineligibility. Subsection (a)(2) provides that ineligibility will not result
when the property transferred, if included in the property reserve, would not
result in ineligibility.

As of
January 1, 1990, there was neither state nor federal authority to impose a
disqualification period for the transfer of assets, except in certain cases involving
institutionalized individuals, who, or whose spouse at any time during or after
the 30-month period immediately before the date the individual became an
institutionalized individual, disposed of resources for less than fair market
value. See 42 United States Code §1396p(c) and Welfare and Institutions Code
§§14002 and 14006. However, as of October 1, 2002, the regulations cited above
had not been amended nor repealed.

Although
CDHS has not formally amended the regulations, it is the departmental policy,
based on federal law, not to apply the regulations to transfers of property
unless the transfer occurred before January 1, 1990, and was made by an
institutionalized individual or by a person who was a beneficiary prior to
January 1, 1990. (All-County Welfare Directors Letter No. 90-01, January 5,
1990)

487-2A

The CDHS has established the following policy
for transfers of property made on or after January 1, 1990 by institutionalized
individuals.

Any such transfer shall not result in any
period of ineligibility in the following situations.

1. The property was
previously exempt as the principal residence under §§50425(c)(1-7) and title
was transferred: To the spouse or community spouse; to a son or daughter under
21; to a son or daughter who is blind or disabled under §50167(a)(1); to a
sibling with an equity interest in the property and who resided in the property
at least one year before the date the transferor was institutionalized; or to a
son or daughter who resided in the property at least two years before the
transferor was institutionalized, and who provided care to the transferor which
enabled that person to reside at home rather than in a medical or nursing
facility.

2. The property was exempt under
§50418.

3. The nonexempt
property was transferred to, or for the sole benefit of, the community spouse;
to a son or daughter who is blind or disabled under §50167(a)(1); to, or for
the sole benefit of, the person's spouse prior to institutionalization, as long
as the spouse did not transfer the property for less than fair market value.

4. The nonexempt
property was, or was intended to be, transferred at fair market value or for
other equally valuable consideration.

5. The resources were
transferred exclusively for a purpose other than to qualify for medical
assistance.

6. The period of
ineligibility would work an “undue hardship” on the transferor.

Section
50408(a)(3) provides that a transfer of property shall not result in
ineligibility for Medi-Cal if adequate consideration is received. Adequate
consideration includes a transfer which was to satisfy a legal debt; a transfer
which was to reimburse someone other than a responsible relative, as specified
in §50351, for care or benefits provided on the basis of an agreement or
understanding that reimbursement would be made; or a written interspousal
agreement that transmutes a married couple's nonexempt community property into
equal shares of separate property. The applicant or beneficiary shall provide
evidence that clearly establishes that the value of the care or benefits
provided was reasonably equivalent to the value of the property transferred.

Section
50408(a)(6) provides that the transfer of property shall not result in
ineligibility when the transfer was made without adequate consideration but the
applicant or beneficiary provides convincing evidence, as specified in
§50409(b), to overcome the presumption that the transfer was for the purpose of
establishing eligibility or reducing the share of cost.

As of
January 1, 1990, there was neither state nor federal authority to impose a
disqualification period for the transfer of assets, except in certain cases
involving institutionalized individuals, who, or whose spouse at any time
during or after the 30-month period immediately before the date the individual
became an institutionalized individual, disposed of resources for less than fair
market value. See 42 United States Code §1396p(c) and Welfare and Institutions
Code §§14002 and 14006. However, as of October 1, 2002, the regulations cited
above had not been amended nor repealed.

Although
CDHS has not formally amended the regulations, it is the departmental policy,
based on federal law, not to apply the regulations to transfers of property
unless the transfer occurred before January 1, 1990, and was made by an
institutionalized individual or by a person who was a beneficiary prior to
January 1, 1990. (All-County Welfare Directors Letter No. 90-01, January 5,
1990)

487-4

Section
50409(b) as modified by Beltran v. Myers provides that transfer
of property without adequate consideration shall result in ineligibility for
Medi-Cal if the transfer was made to establish eligibility or to reduce the
share of cost. It shall be presumed that property transferred without adequate
consideration was for the purpose of establishing eligibility or to reduce the
share of cost. To overcome the presumption, the applicant or beneficiary shall
present "convincing evidence" including subjective evidence that the
transfer was for some other purpose.

As of
January 1, 1990, there was neither state nor federal authority to impose a
disqualification period for the transfer of assets, except in certain cases
involving institutionalized individuals, who, or whose spouse at any time
during or after the 30-month period immediately before the date the individual
became an institutionalized individual, disposed of resources for less than
fair market value. See 42 United States Code §1396p(c) and Welfare and
Institutions Code §§14002 and 14006. However, as of October 1, 2002, the
regulations cited above had not been amended nor repealed.

Although
CDHS has not formally amended the regulations, it is the departmental policy,
based on federal law, not to apply the regulations to transfers of property
unless the transfer occurred before January 1, 1990, and was made by an
institutionalized individual or by a person who was a beneficiary prior to
January 1, 1990. (All-County Welfare Directors Letter No. 90-01, January 5,
1990)

487-5

Section
50411 discusses the period of ineligibility resulting from a transfer of
property. This period shall be the time during which the net market value of
the property at the time of the transfer, less consideration received, would
have supported the applicant or beneficiary and the applicant's or
beneficiary's family. The period of ineligibility is computed by determining
the net value of the property transferred which was in excess of the property
standard. This amount is then divided by the monthly maintenance need for the
applicant or beneficiary and the applicant's or beneficiary's family. The
period of ineligibility may be further reduced by deducting the actual cost of
medical expenses, out-of-home care costs in excess of the maintenance need, and
major home repairs necessary to put the home in a liveable condition. The
period of ineligibility shall begin the first of the month following the date
that the transfer which resulted in ineligibility occurred. The period of
ineligibility shall end if the property involved is reconveyed or the applicant
or beneficiary receives adequate consideration for the property.

As of
January 1, 1990, there was no state nor federal authority to impose a
disqualification period for the transfer of assets, except in certain cases
involving institutionalized individuals, who, or whose spouse at any time
during or after the 30-month period immediately before the date the individual
became an institutionalized individual, disposed or resources for less than
fair market value. See 42 United States Code §1396p(c) and Welfare and
Institutions Code §§14002 and 14006. However, as of October 1, 2002, the
regulations cited above had not been amended nor repealed.

Although
CDHS has not formally amended the regulations, it is the departmental policy,
based on federal law, not to apply the regulations to transfers of property
unless the transfer occurred before January 1, 1990, and was made by an
institutionalized individual or by a person who was a beneficiary prior to
January 1, 1990. (All-County Welfare Directors Letter No. 90-01, January 5,
1990)

487-6

There are
restricted benefits for individuals in long-term care facilities who transfer
property for less than fair market value. If a disqualifying transfer occurs,
all Medi-Cal services other than long-term care services will be covered.
(All-County Welfare Directors Letter (ACWDL) No. 92-57, October 2, 1992)

487-6A
REVISED 7/10

The
Statewide Average Private Pay Rate (APPR) for nursing facility services is
$5698 in 2009 and $6311 in 2010. The APPR is used for calculating the period
of ineligibility for transfers of non-exempt property for less than fair market
value. The APPR is used when the date of application or date of
institutionalization (the more recent of the two) occurs in 2009 or 2010 as
applicable and there is a disqualifying transfer. Existing periods of
ineligibility are not updated to reflect the increase in the APPR. (ACWDLs
09-05, February 2, 2009 and 10-08,April 30, 2010)

487-6B
ADDED 11/05

The 20__
statewide Average Private Pay Rate (APPR) for nursing facility services is
$____. This rate is used for calculating the period of ineligibility for
transfers of non-exempt property for less than fair market value. This figure
is used when the date of application or date of institutionalization occurs in
2005 and there is a disqualifying transfer. Existing periods of ineligibility
prior to ____ are not updated to reflect the increase in the APPR. (ACWDL
______)

487-7
ADDED 3/09

Effective
January 1, 1997, counties are instructed to gather all the necessary
information as usual, determine whether or not the transfer was made on or
after January 1, 1997 and whether or not it is potentially disqualifying in
accordance with ACWDL No. 90-01, Section 50408 – 50411.5. If the transfer
still appears to be a disqualifying transfer, counties shall complete the
Medi-Cal 176 PI. If in completing the Medi-Cal 176 PI, any months remain
for which a period of ineligibility would be imposed resulting in
restricted services eligibility for the institutionalized individual, then the
counties shall copy and send or fax all pertinent case record documentation to
the Department of Health Care Services/MCED at 1501 Capitol Ave..Suite 71-4063,
MS 4607, P.O. Box 997417 Sacramento, California 95899-7417; Attn: Property
Analyst.

The
county shall pend the case and shall NOT send a Notice of Action for restricted
services eligibility to the institutionalized individual until the property
analyst has completed the review of the case record documentation and
determination.
When the property analyst completes the review, counties will be notified
whether or not the Notice of Action should be sent and if any modification in
the imposed period is required. Only at that point shall counties issue
Notices of Action granting restricted services or reducing services to
restricted services for institutionalized individuals.

(All County
Welfare Director’s Letter 97-05, February 26, 1997)

488-1
ADDED

1/13Under Sneede, v. Kizer, there
is an equal allocation of income and property from the spouse and/or parent to
himself/herself (property only), his/her spouse and/or natural or adoptive
children. Income and property can only be allocated in that one way direction
which means that a child's own income or property cannot be used to determine
eligibility or share of cost for anyone other than himself/herself. (Sneede
v. Kizer; ACWDL 90-76)